Real estate loans can be of great help. Buying a new property is not an easy thing, and you have to keep a lot of things in mind before you can take that last step and buy your property. There are some common mistakes that everybody does whenever they are buying new real estate property. These are the problems that are related to the loans taken from commercial banks. If you are aware of them, then you can easily ignore them.
When it comes to take loans for home, gather information prior to make your mind. Both in terms of time period and amount, this loan can cost you heavily, if you fail to choose the right lender.
Stated Income vs. Tax Returns!
If you are taking loan from an ordinary traditional bank, then you will have to present a certain number of tax return bills. Most of the banks ask you to give tax record of at least previous ten years; if you can provide them only, then you will be able to get a loan. Oftentimes, people cannot even qualify for the loan because either their income rate is very low, or they have very high expenses. The only thing left to do is go to Stated Income Lenders. They will not ask you to verify your income and your assets, and you can get your loan very easily. However, since the beginning of 2017, the lenders have started to give loans only to those borrowers who have huge cash reserves, enjoy excellent credit score, and can make considerable down payments.
Special Purpose Property Restriction!
Among the numerous challenges facing the real estate industry, restrictions to Special Purpose Property are gaining attention day by day. Constructions like hospitals, theaters, religious buildings that are built for a specific purpose are known as Special Purpose Property.
There are a hundred different property types that are now being put on the list of special-purpose properties. The most common prey to this problem is commercial properties, and the business owners are having a hard time to get their loans. If your desired property is not an apartment, or an office building then you might have some serious trouble. This means that you cannot take loans for your bars, restaurants, auto service stations, churches, nursing homes, funeral homes, and assisted-living buildings and facilities.
Commitment fee is the fee that a borrower is bound to give the lender as the lender is agreed to provide him the loan. It is a one-time fee paid at the end of the transaction. In certain circumstances, you may require to give a big commitment fee. This is an upfront fee, and paying this fee is compulsory. You won’t need to pay this fee while applying for a commercial loan, but in case of personal estate loans, it becomes necessary. This business practice has been legalized by the court, and the banks have been using this grant as a weapon for quite some time to make their profit. Even if you are seeking a loan for personal property, you should try to avoid it as much as possible.
Business Plan Demand
If you are looking for a commercial loan, then it is possible that some of the banks will ask for your business plan. This is the riskiest thing that you could ever do. You should never share your business plan with anyone at any time. This is the most confidential thing and there are many potential thieves that will be waiting to grab your plan.
Generally, lenders impose a processing fee on home loans, which is non-refundable. From 0.25 to 0.50% of the total loan amount, the fee can range anywhere. It implies that even if you fail to meet the eligibility criteria of your home loan, the lender will not repay the amount you have paid. To cope up with the various challenges facing the real estate industry, this step is, nowadays, being taken by many lenders. Hence, you have to pick one only after understanding his processing fees policy well.
The Bottom Line
As home loan is a huge amount, you should take it only after doing the homework properly. Make sure that you know about your rights and the federal laws of the country well to approach if necessary.